Medical device makers want tax repealed

The CEOs of 16 medical device companies descended on Capitol Hill to make the case for their industry.

Asking for the repeal of the medical device tax in the health care law and continued improvements to the FDA’s 510(k) regulatory process, they said they worried the booming industry would lose its competitive edge in the economy.

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POLITICO 44

Kelvyn Cullimore, CEO of Dynatronics, a manufacturer of physical therapy equipment, said that he came to Washington to remind his Utah delegation of the potential consequences of not repealing the medical device tax.

“We understand why the tax was done — the bill needs to be paid for — and they said we would still benefit from the [health care law] anyway. We don’t buy that,” he said. “The repeal of the tax is such a critical part of our economic success, that to not repeal it is like putting sand in our gas tank.”

Medical device companies employ nearly 2 million people and pay a salary that is nearly 40 percent higher than the national average. It’s one of the leading net-exporters in the U.S. And with all the congressional talk of job creation and innovation senators and representatives on both sides of the aisle are moving to help the industry.

On Thursday, Republican Sen. Scott Brown introduced legislation to repeal the 2.3 percent tax on medical devices. It is the second bill of it’s kind introduced in the senate in as many weeks.

Last year, Brown, whose state of Massachusetts is home to 225 medical device firms, had introduced legislation to repeal the tax months after the bill was passed.

“[It’s] a provision in Obama’s health care bill that is particularly bad for Massachusetts…The medical device industry in Massachusetts is critical to our economy, and our state cannot afford this tax,” Brown said last week.

More and more medical device companies are taking their manufacturing overseas where the regulatory process is faster and more predictable. Almost 80 percent of medical device innovation comes from small businesses and venture capitalists, and industry officials said that if the medical device tax in the Affordable Care Act is not repealed it will be devastating for business’ ability to keep up in a growing global market.

And at least rhetorically, the president seems to understand that concern.

In his State of the Union address, Obama stressed technology and innovation as a way to “win the future,” and that what is “at stake is whether new jobs and industries take root in this country, or somewhere else.”

“When the president talks about all of the positive attributes of innovation of exports and the kind of jobs he’d like to see the economy create, we like to think he’s talking about us,” said Advanced Medical Technology Association (AdvaMed) CEO Stephen Ubl at a meeting with reporters.

“Our leadership [in the industry] is no longer assured which is why our agenda this year is going to focus very much on policies that we believe will support innovation and increase job creation,” he said.

To encourage growth in the industry a bipartisan bill was introduced in the Senate on Tuesday. Sen. Amy Klobuchar (D-Minn) and Sen. Brown introduced the “Innovate America Act,” a bill that works to keep and encourage industries like the medical device industry in the U.S.

“The medical device industry is a classic example of why we need a bill like this,” said Sen. Klobuchar in an interview with POLITICO. “It takes a lot of the red tape away from rules and regulations in the 20 biggest export industries. It will also reward schools that are top performers in sciences and technology so we can have the educated workforce we need to compete.”

The legislation is a step in the right direction, industry bigs said, but repeal of the device tax will continue to be on top of their legislative priorities.

Supporters of the medical device tax have argued that the money the industry would make from the newly insured outweighs the tax burden. The original tax in the bill was 4.6 percent of revenue and was reduced to 2.3 before the ACA’s final passage.

The tax, they say, is the industry’s way of helping pay for a law the industry will benefit from.

Not so, says Eamonn Hobbs, chairman of the board for MDMA and CEO of Delcath Systems, a company that makes chemotherapy treatments and devices.

“The whole premise of innovation is to increase the quality of health care, increase the health of the public, and decrease health care costs,” Hobbs argued. “This is a real leadership industry in the U.S, and I think the president is well aware of that.”

“It’s in the best interest of everyone to not shoot the golden goose,” he said.

All of the progress we've made on medical science has become a tool for the trial lawyers to fill their pockets and end R&D into real medical progress to help people. Just part of the Democrat plan to makew sure ALL Amercans receive third world medicine.

Now come the real reasons the Repubs. want the health care law repealed. This is the first of the cock(Koch)roatches to hit the daylight. These are the guys who were getting the extra fed money with that advantage bs the insurance companies were peddling.

While we're at it, let's just repeal all corporate taxes. Then we can repeal all individual taxes, or just taxes on wealthy people. Then we can close down government, eliminate all entitlements, and while we're at it, eliminate the armed services as well since there will be no money to fund them.

Will that make the Republicans, the Tea Party, and Wall Street happy? Because apparently that's all that really matters.

Just another big corporation trying to save lives. Naturally the lib's hate them. It's in their DNA. How does it make sense to lose jobs and products that benefit the planet? Hatred, a terrible thing among democrats.

This is a great example of how everyone wants to be enriched at everyone elses expense.

Take politics out of it for a moment and just look at this on the surface. This industry wants releif from taxation imposed by Congress. They seem to make a pretty convincing argument...jobs saved, competitive advantage, etc. But, who will pick up the tax burden if Congress decides to give them relief. Or, will the lost revenue be replaced with borrowing.

Now interject the politics. According to the article Brown's state has 225 medical device companies. If he is successful those companies will save millions of dollars. Do you think Brown wants to win re-election in a few years? Hopefully it is pretty obvious why he wants to have the tax repealed. He wants financial support from the industry for his next campaign.

So, the industry gets what it wants, Brown gets what he wants but, where does that leave us? Someone else will get burdened with the tax or we will all get burdened with more debt.

“The medical device industry is a classic example of why we need a bill like this,” said Sen. Klobuchar [Senator advocating passage] in an interview with POLITICO. “It takes a lot of the red tape away from rules and regulations in the 20 biggest export industries. It will also reward schools that are top performers in sciences and technology so we can have the educated workforce we need to compete.” How will it reward schools? Sounds like more spending.

In December 2010, Gallup, the polling organization, reported that Congress had a 13% approval, the lowest it had ever reported. Wonder why? The governing process has become corrupted. Career politicians with their self-serving interests make politically expedient decisions that are calculated to enhance their efforts to be re-elected every second or sixth year. Their shortsightedness ensures that long-term solutions to the Nation's problems are lost in the politics of the moment.